Bond Valuation

Running head: FINANCE
Finance
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1FINANCE
Table of Contents
Bond Valuation..........................................................................................................................2
References..................................................................................................................................6

2FINANCE
Bond Valuation
a) The US Bond market is the largest bond market in the world which sets out the most
reliable and liquid financial instruments backed up by the US Government. The
maturity of the bond varies in according with the nature and classification of the bond
whose tenure ranges between 1 Years to 30 Years of time. The bond market currently
provides a wide range of offerings from Treasury Bonds which are linked to inflation
protected. The majority of the public debt is financed with the help of the US
Treasury Securities which are sold to individuals and qualified investors. The
outstanding bond issues can be generally classified into sovereign bonds denominated
in US Dollar where the cumulative volume of the bond is around 15.98 trillion1.
Municipal Bonds denominated in USD outstanding bond is around 30.80 billion. The
Corporate Bond issued by the corporates is denominated in various currencies like
USD, EUR, GBP and AUD. The ratings and the risk return of the bond is well stated
and described. The 1 Year Treasury yield for the US Bond market is currently 2.41%.
On the other hand side the yield generated by the Municipal Bond was around 1.53%.
Treasury Inflation Protected Securities on the other hand side has given a yield of
0.46%. The performance of the bond market was compared in contrast to the GDP of
the economy, which was assessed to be increasing in terms of Government Debt to
GDP ratio.
b) The yield curve for US Treasury Securities is seemed to be rising upward where
return generated from the 1-year. However while examining the last close of the yield
generated and performance by the treasury securities it was observed that the 1 month
at 2.40%, 3 month at 2.43% and 6 month yields at 2.46% were found to be increasing.
The Yields for 2 year was at 2.31%, 5 year is at 2.28% treasury yield on the other
1 "United States Rates And Bonds." Bloomberg.com. N.p., 2019. Web. 11 Apr. 2019.